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test5_ch09-10 - Achievement Test 5 Chapters 9 and 10...

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Achievement Test 5: Chapters 9 and 10 Name ___________________________ Financial Accounting, 5e Instructor ________________________ Section # _________ Date __________ Part I II III IV V VI VII Total Points 24 18 5 10 13 15 15 100 Score PART I — MULTIPLE CHOICE (24 points) Instructions: Designate the best answer for each of the following questions. Use the following data for questions 1 and 2 below: Quayle Company bought real estate, on which there was an old office building, for $800,000. It paid $80,000 in cash as a down payment and signed a 10% mortgage for the remainder. It immediately had the old building razed at a net cost of $70,000. Attorneys were paid $12,000 in connection with the land purchase and an additional $6,000 in connection with permits and zoning variances necessary for Quayle's new office building. $40,000 was paid for excavation for the basement of the new building, $2,800,000 was paid for construction of the new building, and $150,000 was paid for a parking lot and necessary walkways and driveways. ____ 1. The new office building should be recorded at a. $2,800,000. b. $2,846,000. c. $2,840,000. d. $2,916,000. ____ 2. Land should be recorded at a cost of ____ 3. Kotsch Textile purchased machinery for $80,000 eight years ago. It was expected to have a useful life of ten years, no salvage value, and was depreciated using the straight-line method. At the end of its eighth year of use, it was retired from service and given to a junk dealer. The entry to record the retirement includes a
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Test Bank for Financial Accounting, Fifth Edition ____ 4. Which of the following should not be included in the plant assets (property, plant, and equipment) classification? ____ 5. Salvage (residual) value is deducted in the computation of depreciation expense in all of the following methods with the exception of a. straight-line. b. units-of-activity. c. declining-balance. d. All of the above include a deduction of salvage value. ____ 6. The three primary accounting problems associated with accounts receivable are ____
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